February 9, 2012

DC: Move Deposits to Community Banks

A bill has been introduced in the District of Columbia Council to encourage the District government to increase deposits of government funds to local, community banks rather than to make those deposits into out-of-town megabanks.

Participating banks would agree in return to make new loans to District small businesses equal to twice the amount of new DC government deposits. So for example, a $50 million deposit (of the more than $1 billion of invested District funds) into an eligible local bank would result in that bank making $100 million of new loans to DC small businesses. Interest on the deposits would be at market rates, so DC taxpayers come out with the same investment return while keeping the funds local. 

I recently had the opportunity to testify in support of the Bill before the Council’s Committee on Public Services and Consumer Affairs, chaired by Councilmember Yvette Alexander.

I reaffirm my full support for the Bill and urge its prompt passage.